Author: Gourav Vallabh, TNN
Publication: The Times of India
Date: September 3, 2026
URL:   https://timesofindia.indiatimes.com/toi-plus/business-economy/why-critics-of-gdp-numbers-are-plain-wrong/articleshow/133740757.cms

You can't compute growth by comparing numbers from two different series. So, 7.8% is the correct growth rate. Also, there is plenty of other economic data that supports the high growth figure

India’s first-quarter GDP release has generated unusual controversy. The official estimate says nominal GDP grew by 10.3% in Q1 FY 2026-27; a competing calculation puts it at 2.6%. Neither can describe the same comparison. This is not a contest between optimism and pessimism. It turns on an elementary statistical rule: growth must be calculated between numbers prepared under the same series. Apply one ruler to both years, and the 2.6% claim collapses.

At current prices, Q1 FY 2026-27 GDP is estimated at ₹88.27L cr. Its comparable Q1 FY 2025-26 estimate, in the new 2022-23 series, is ₹80L cr, yielding 10.3% growth. At constant prices, GDP rose from ₹75.46L cr to ₹81.36L cr, giving real growth of 7.8%. The 2.6% figure divides the new-series ₹88.27Lcr by the old-series ₹86.05L cr. That is not an alternative estimate; it is arithmetic built by splicing two statistical frameworks.

Why did last year’s ₹86.05L cr become ₹80L cr? The published journey is clear.

• On Aug 29, 2025, Q1 FY 2025-26 nominal GDP was ₹86.05L cr, under the old series.

• When the 2022-23 series arrived in Feb 2026, it became ₹80.32L cr.

• It was updated to ₹80.44L cr in June, and to ₹80L cr in Aug, after the new IIP and PPI series were incorporated.

• The denominator was, therefore, revised through a documented sequence, rather than changed at the last minute, to fabricate growth.

A crucial distinction is being lost. Nominal GDP, or GDP at current prices, values production at the prices prevailing in that period; it does not use the base year’s price list. Merely replacing 2011-12 with 2022-23 as reference year cannot mechanically reduce nominal GDP.

The base-year price reference directly affects real GDP, which holds prices constant, to isolate changes in output. If a factory sells 100 units at ₹50 each, its nominal output is ₹5k, regardless of the base year. If better records, later, reveal returns or double-counting, however, the estimate must change. That is a data and measurement revision, not a base-price effect.

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Narendra Modi @narendramodi

India’s exemplary GDP growth of 7.8% during Q1 of FY 2026-27 is a herculean feat.

The collective strength of our people ensured India delivered such growth despite oil price shocks and supply chain issues in the midst of global uncertainties.

Doomsayers were doomed and India bloomed…yet again!

Aug 31, 2026
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A new GDP series does much more than replace a price reference. It can introduce new surveys and GST data, better company and govt records, a change in coverage of economic activities, removal of duplication, updated ratios, and improved methods of estimating value addition.

The 2022-23 series expands coverage of the unincorporated sector, adopts double deflation in manufacturing, and improves quarterly benchmarking. These changes can revise both nominal and real GDP for earlier periods. Thus, two propositions are simultaneously true: changing base-year prices alone does not alter nominal GDP, but a comprehensive series revision can alter it because the information set and methodology have changed.

Those insisting on 2.6% should state required assumptions openly – that the new surveys and GST data add no information; that company and govt records are unchanged; that economic coverage has not widened; that corrections for duplication and updated ratios do not matter; and that the revised methodology has no effect on historical nominal estimates.

Those assumptions contradict the documented construction of the new series. The denominator is not optional: ₹86.05L cr remains a historical old-series estimate, while ₹80L cr is the comparable new-series estimate. Valid growth requires the same ruler for both years.

The broader evidence also fits a strong quarter. Cement production grew 8.9%, IIP for infra & and construction goods 7.2%, electricity IIP 9.3%, capital goods output 15.2%, commercial vehicle sales 18.3% and cargo at major ports 6.2%. Because these indicators help compile quarterly GDP, they’re not wholly independent. Nevertheless, they reflect observable activity, which is hard to reconcile with nominal growth of only 2.6%.

The internal pattern is equally coherent:

• Real manufacturing grew 9.2%, utilities 8.9%, construction 7.7% and services 10%.

• Private consumption rose 7.1%, fixed investment 11.9% and real exports 12%.

Nor is 7.8% real growth an implausible break from India’s recent path. Before Aug’s update, published real GDP growth for FY 2023-24, 2024-25 and 2025-26 was 7.2%, 7.1% and 7.7%, respectively. National Accounts Statistics 2026, after incorporating updated IIP, PPI, and administrative data, revised these rates to 7.3%, 7.2%, and 7.8%. Either vintage shows three consecutive years above 7%. Q1 FY 2026-27 grew 7.8%, against 6.9% a year earlier. Annual and quarterly rates are not identical, but they establish continuity, rather than a statistical surprise.

If 7.8% real growth is consistent with India’s recent economic path, the next question is why nominal GDP grew faster, at 10.3%? This is explained by the price component, captured in GDP deflator. Nominal GDP reflects changes in both output and prices, whereas real GDP seeks to isolate output.

The two growth rates imply an increase of roughly 2.3% in the GDP deflator. This deflator should not be confused with either CPI or WPI. It measures price changes across the economy-wide value chain, using multiple price indicators with varying weights. Household consumption prices, wholesale goods prices and prices embedded in value addition, can, thus, move differently.

Every GDP number has a journey. For Q1 FY 2026-27, the first advance estimate was released in Aug 2026, the second advance estimate will follow in Nov, and provisional estimate in Feb 2027. The first revised estimate will be in Feb 2028, followed by the second and final revised estimates in Feb 2029. Revisions are part and parcel of GDP estimation, not evidence of manipulation.

NSO should also publish a simple bridge showing how documented changes in data, coverage and methodology reduced the figure from ₹86.05L cr to ₹80L cr.

Scrutiny must begin with comparable numbers. In current series, Q1 FY 2026-27 recorded 10.3% nominal growth and 7.8% real growth; 2.6% isn’t an alternative estimate, but a category error produced by mixing series. Explanations ignoring this elementary principle must be challenged, because they violate both economic theory and common sense.